I have the same problem with windows xp (so I don't think is win 7)....
This is apparently not a matter of Win 7 or not, since there are people who can play it right with it...
You haven't got Japanese encoding.
1. Uninstall Togainu No Chi
2. Install Japanese Language
3. Change to Japanese encoding*
4. Reinstall the game
5. Apply the english patch
* = In windows 7,
go to control panel, 'Clock, Language and Region'.
Click 'Region and Language'
Click the 'Administrative' tab
Click 'Change system Local' and set it to Japanese.